Carl Demaio: Golden State can be reinvigorated

If you are worried about California's future, there's no shortage of disturbing statistics to keep you up at night. California's unemployment rate was 9.8 percent in November – and, with a host of new regulatory mandates added when the New Year began, our state is becoming even more unattractive for businesses.

California's three largest pension funds have promised $500 billion in retirement benefits that they don't have the money to pay for. California's cities have another $135 billion in unfunded pension liabilities, and a couple of municipalities have already filed for bankruptcy.

California also faces a $765 billion infrastructure deficit over 10 years. Worse, the current paradigm for selecting, financing, maintaining and managing infrastructure is dysfunctional and filled with inefficiency.

And while education costs consume more than half of the state budget, far too many children are trapped in poorly performing schools. California students lag behind national achievement averages in math, science and reading.

Without immediate action, expect state service cuts, along with closures of schools, parks and fire stations in many California cities. It's time for taxpayers and leaders to step forward: What do we want California to look like in 10 years – and how do we get there?

Hopefully, the budget Gov. Jerry Brown is expected to release Thursday will offer a good starting point. But even though they won tax increases in November, some Democrats say even more tax and fee increases are needed. Many Democrats are also eagerly looking to expand existing government programs that have had to be cut back in recent budget battles.

Republicans, meanwhile, whose ineffectiveness has paved the way for historic Democratic supermajorities in the state Senate and Assembly, say they oppose higher taxes and support smaller government. Far too often, though, the GOP arrives at policies that voters perceive as "smaller government and subsidies for me, but not for thee."

Both major political parties have failed to address the state's fundamental problems. You cannot simply pump more tax dollars into a broken system – or, for that matter, starve the system, without offering credible alternatives and choices.

Californians must change the system itself – and that's the focus of Reason Foundation's new California Reform Agenda. The project will follow the model we developed with the successful "San Diego Citizens Budget" project, which in 2003 helped uncover that city's financial problems and produced an ambitious reform agenda that has helped save the city from bankruptcy.

Critics said you could not implement major fiscal reforms in a city as Democratic as San Diego, which boasts a voter registration and demographics that largely mirror California. In the end, we got many reforms through a Democratic-controlled City Council – and voters overwhelmingly approved major reforms to advance the outsourcing of city services and switch city employee pensions to a 401(k) retirement program.

Our critics also said we could not solve the city's financial woes without tax hikes. Yet, over six years, we defeated three attempts to raise taxes – and balanced budgets without tax hikes or service cuts.

It worked in San Diego. Put simply: reforming California is possible.

Carl DeMaio, a former San Diego councilman, is chairman of the new California Reform Council at the Reason Foundation.

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